-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MlCXHdXFi/lc5C48E+xbZvsI7U+/K1gJ4hvNT8fMMio4LPZJnEqV3MKqPtB3rhq6 DexOPkFKoJZjuJiC1f/gGg== 0000893220-98-000903.txt : 19980511 0000893220-98-000903.hdr.sgml : 19980511 ACCESSION NUMBER: 0000893220-98-000903 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980329 FILED AS OF DATE: 19980508 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEFLEX INC CENTRAL INDEX KEY: 0000096943 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 231147939 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05353 FILM NUMBER: 98613758 BUSINESS ADDRESS: STREET 1: 630 W GERMANTOWN PK STE 450 STREET 2: SUITE 450 CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 BUSINESS PHONE: 2158346301 MAIL ADDRESS: STREET 1: 630 WEST GERMANTOWN PIKE STREET 2: SUITE 450 CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 10-Q 1 FORM 10-Q, TELEFLEX INCORPORATED 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 29, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-5353 TELEFLEX INCORPORATED (Exact Name of Registrant as Specified in its Charter) Delaware 23-1147939 (State of Incorporation) (IRS Employer Identification Number) 630 West Germantown Pike, Suite 450 Plymouth Meeting, PA 19462 (Address of Principal Executive Office) (Zip Code) (610) 834-6301 (Telephone Number Including Area Code) None (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date. Class Outstanding at March 29,1998 Common Stock, $1.00 Par Value 37,326,802 2 Teleflex Incorporated Condensed Consolidated Balance Sheet (Dollars in Thousands) Assets
Mar. 29, Dec. 28, 1998 1997 ----------- ---------- Current assets Cash and cash equivalents $ 47,226 $ 30,702 Accounts receivable less allowance for doubtful accounts 286,803 260,187 Inventories 215,301 218,538 Prepaid expense 20,048 21,182 Assets held for sale 35,868 ---------- ---------- 569,378 566,477 Property, plant and equipment, at cost, less accumulated depreciation 370,388 364,013 Investments in affiliates 37,946 37,510 Intangibles and other assets 112,146 111,165 ---------- ---------- $1,089,858 $1,079,165 ========== ==========
Liabilities and shareholders' equity
Current liabilities Current portion of borrowings and demand loans $ 85,983 $ 115,729 Accounts payable and accrued expenses 161,640 158,386 Estimated income taxes payable 31,266 20,792 ---------- ---------- 278,889 294,907 Long-term borrowings 242,995 237,562 Deferred income taxes and other 82,495 82,943 ---------- ---------- 604,379 615,412 Shareholders' equity 485,479 463,753 ---------- ---------- $1,089,858 $1,079,165 ========== ==========
3 Teleflex Incorporated Condensed Consolidated Statement of Income (Dollars and Shares in Thousands, Except Per Share)
Three Months Ended --------------------- Mar. 29, Mar. 30, 1998 1997 -------- -------- Revenues $345,760 $269,344 -------- -------- Cost of sales 245,735 186,139 Operating expenses 64,989 54,271 Interest expense 4,485 3,356 -------- -------- 315,209 243,766 -------- -------- Income before taxes 30,551 25,578 Provision for taxes on income 10,693 8,901 -------- -------- Net income $ 19,858 $ 16,677 ======== ======== Earnings per share Basic $ 0.53 $ 0.46 Diluted $ 0.52 $ 0.45 Dividends per share $ 0.100 $ 0.088 Average number of common and common equivalent shares outstanding Basic 37,204 36,254 Diluted 38,320 37,152
4 Teleflex Incorporated Condensed Consolidated Statement of Cash Flows (Dollars in Thousands)
Three Months Ended --------------------------- Mar. 29, Mar. 30, 1998 1997 ----------- ----------- Cash flows from operating activities: Net income $ 19,858 $ 16,677 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 13,904 11,337 (Increase) in accounts receivable (27,132) (21,311) Decrease (increase) in inventory 2,651 (1,132) Decrease in prepaid expenses 1,096 707 Increase in accounts payable and accrued expenses 9,784 5,498 Increase in estimated income taxes payable 7,785 6,972 ---------- ----------- 27,946 18,748 ---------- ----------- Cash flows from financing activities: Proceeds from new borrowings 9,280 Reduction in long-term borrowings (1,056) (1,393) (Decrease) increase in current borrowings and demand loans (35,006) 4,012 Proceeds from stock compensation plans 1,629 1,010 Dividends (3,713) (3,222) ----------- ----------- (28,866) 407 ----------- ----------- Cash flows from investing activities: Expenditures for plant assets (18,925) (14,794) Payments for businesses acquired (1,000) (349) Proceeds from sale of businesses and assets 35,868 Investments in affiliates (602) (6,650) Other 2,103 1,905 ----------- ----------- 17,444 (19,888) ----------- ----------- Net increase (decrease) in cash and cash equivalents 16,524 (733) Cash and cash equivalents at the beginning of the period 30,702 68,618 ----------- ----------- Cash and cash equivalents at the end of the period $47,226 $67,885 =========== ===========
5 Teleflex Incorporated Statement of Comprehensive Income
Three Months Ended ------------------ Mar. 29, Mar. 30, 1998 1997 ---- ---- Net income $19,858 $16,677 Cumulative translation adjustment 453 (1,284) ------- ------- Comprehensive income $20,311 $15,393 ======= =======
During the first quarter of 1998, the company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income". As presented above, cumulative translation adjustment represents the only element of other comprehensive income. Notes to Condensed Consolidated Financial Statements Note 1 The accompanying unaudited condensed consolidated financial statements for the three months ended March 29, 1998 and March 30, 1997 contain all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to present fairly the financial position, results of operations and cash flows for the periods then ended in accordance with the current requirements for Form 10-Q. Note 2 At March 29, 1998, 3,180,449 shares of common stock were reserved for issuance under the company's stock compensation plans. Note 3 On April 25, 1997, the Board of Directors approved a two-for-one split of the Company's common stock to be effected in the form of a 100% stock dividend to holders of record at the close of business on May 23, 1997. The per share data included in this report have been adjusted to reflect this stock dividend. Note 4 Inventories consisted of the following:
Mar. 29, Dec. 28, 1998 1997 ---- ---- Raw materials $ 74,287 $ 72,806 Work-in-process 45,253 40,368 Finished goods 95,761 105,364 -------- -------- $215,301 $218,538 ======== ========
6 Note 5 Business segment information:
Three Months Ended ------------------ Mar. 29, Mar. 30, 1998 1997 ---- ---- Sales Commercial $162,594 $122,740 Medical 79,344 79,568 Aerospace 103,822 67,036 -------- -------- Total $345,760 $269,344 ======== ======== Operating Profit Commercial $18,054 $16,107 Medical 9,497 8,588 Aerospace 11,686 7,736 ------- ------- Total $39,237 $32,431 ======= =======
Management's Analysis of Quarterly Financial Data Results of Operations: Revenues increased 28% in the first quarter of 1998 to $345.8 million from $269.3 million in 1997. The increase resulted from gains in the Commercial and Aerospace segments while Medical Segment sales were flat. Approximately one-half of the growth was the result of acquisitions, primarily of United Parts Group N.V. (United Parts), a European manufacturer of driver control systems purchased at the end of 1997. The other half of the increase in sales resulted from gains in the company's core product lines, principally in the Aerospace Segment. Changes in foreign exchange rates reduced reported sales by 2% compared with the first quarter of 1997. The Commercial, Medical and Aerospace segments comprised 47%, 23% and 30% of the company's net sales, respectively. Gross profit margin decreased to 28.9% in 1998 compared with 30.9% in 1997. A reduction in the proportion of sales from the Medical Segment, which has a higher gross margin compared with the other segments and a lower contribution to gross margin from recent acquisitions, resulted in the decrease. Operating expenses as a percentage of sales decreased to 18.8% in 1998 compared with 20.1% in 1997 resulting from the decline in the contribution of sales from the Medical Segment which has higher operating expenses relative to the other two segments. 7 Operating profit increased 21% in the first quarter of 1998 from $32.4 million to $39.2 million. Operating margin declined slightly from 12% in 1997 to 11.3% of sales in 1998. While operating profit increased in all three segments, operating margin declined overall as a result of the reduction in the Commercial Segment. Industry Segment Review: Sales in the Commercial Segment increased 32% from $122.7 million in 1997 to $162.6 million in 1998. The increase resulted from gains in the automotive and industrial product lines while the marine product line sales declined. The majority of the increase in sales in the Commercial Segment was the result of acquisitions in the prior year, primarily United Parts in December 1997. Operating profit in 1998 of $18.1 million represents a 12% increase compared with 1997; however, operating margin declined from 13.1% to 11.1% due primarily to a decrease in the automotive product line as a result of lower margins from recently acquired businesses. The Medical Segment sales remained unchanged at $79.3 million in 1998 as an increase in the surgical devices product line offset a decline in the hospital supply product line. The decline in reported hospital supply sales was due to weaker foreign currencies. Sales in the surgical devices product line improved as closure, instruments and services, all contributed to the increase. Operating profit increased 11% from $8.6 million to $9.5 million and operating margin improved from 10.8% to 12.0%. The improvement in operating profit and margin is the result of gains made in the surgical devices product line. The prior-year results were affected by the additional expenses associated with the realignment of surgical devices sales and manufacturing and by the integration of an acquisition of a ligation clip manufacturer. The Aerospace Segment sales increased 55% from $67.0 million in 1997 to $103.8 million in 1998. Sales increased in all product lines in this Segment: cargo systems, coatings, repair services and turbine components. The majority of the growth came from repair services which, along with the company's other product lines in this Segment, has been affected by the favorable conditions in the commercial aviation market. Operating profit increased 51% and operating margin declined slightly from 11.5% to 11.3% as a result of the higher sales contribution from repair services. 8 Cash flow from operations increased $9.2 million during the period ended March 29, 1998 compared with 1997 due to higher net income and depreciation. Expenditures for plant assets totaling $18.9 million increased $4.1 million in the first quarter over the same period in 1997. The increase was primarily within the Aerospace Segment where capacity expansion, begun in 1997, is continuing in order to meet higher sales demand. During the first quarter of 1998 certain non-strategic assets of United Parts, acquired in December 1997, were sold for $35.9 million in cash which proceeds were used to repay related current borrowings. Long-term borrowings increased by $5.4 million from $237.6 million at December 28, 1997, to $243.0 million at March 29, 1998. The increase was the result of additional borrowings incurred to finance the construction of a facility in Singapore offset by the effects of lower foreign currency translation rates and, to a lesser extent, repayments. The increase in shareholders' equity, primarily due to higher net income, resulted in an improvement in the ratio of long-term borrowings to total capitalization from 34% at December 28, 1997 to 33% at March 29, 1998. 9 Teleflex Incorporated Part II Other Information Item 6. Exhibits and Reports on Form 8-K (A) Reports on form 8-K. No reports on form 8-K were filed during the quarter. 10 Teleflex Incorporated Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TELEFLEX INCORPORATED /s/ Harold L. Zuber, Jr. ------------------------ Harold L. Zuber, Jr. Vice President and Chief Financial Officer /s/ Stephen J. Gambone ----------------------- Stephen J. Gambone Controller May 8, 1998 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-27-1998 DEC-29-1998 MAR-29-1998 47,226 0 286,803 0 215,301 569,378 370,388 0 1,089,858 278,889 242,995 0 0 37,327 448,152 1,089,858 345,760 345,760 245,735 245,735 64,989 0 4,485 30,551 10,693 19,858 0 0 0 19,858 .53 .52
-----END PRIVACY-ENHANCED MESSAGE-----